Shaw Communications Inc.’s higher-than-expected capex guidance has at least one analyst suggesting that the company has little flexibility when it comes to sustaining its current dividend.

Shaw reported its third quarter results on Friday, and unveiled capex guidance of $1.3 billion for fiscal 2017. That was $100 million higher than analysts were anticipating.

This prompted Aravinda Galappatthige at Canaccord Genuity to tell clients that unless Shaw’s capex makes a significant move downward in the subsequent years, it’ll be tough for the telecom company to boost its free cash flow above its dividend until late in 2019.

The analyst did acknowledge that Shaw has loaded quite a few of its capital initiatives into 2017, including network investments aimed at expanding broadband capacity, as well as making X1, Comcast’s cloud-based, voice-powered cable and DVR service, available to all customers.

However, given ongoing upward revisions for Shaw’s capex, the company’s capex intensity in its wireline business, and the large amount of network development ahead for Wind Mobile, Galappatthige sees little reason for capex to decline.

He also noted that Shaw and Wind may have to buy more wireless spectrum.

So while Shaw’s balance sheet is in what Galappatthige considers “safe” territory with leverage at 2.5x trailing 12-month EBITDA, the analyst is forecasting this figure will rise toward 2.8x as the company’s higher payout ratio of 165 per cent takes its toll.

“We have to surmise, therefore, that there is little margin for error with respect to sustaining the current dividend,” Galappatthige said, cutting his price target on Shaw shares to $24 from $25, while maintaining a hold rating.

The analyst also suggested that a potential option for Shaw at some point in the future is the sale of its roughly 39 per cent stake in Corus Entertainment Inc., which could free up almost $1 billion on its balance sheet.